Payola and Sponsorship Identification – Broadcast Law Bloghttps://www.broadcastlawblog.com
Discussion of FCC, copyright, advertising and other legal issues of importance to radio and television broadcasters and other media companies Sun, 24 May 2020 16:00:35 +0000en-US
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1 https://wordpress.org/?v=5.3.3&lxb_maple_bar_source=lxb_maple_bar_sourceThis Week at the FCC: May 16, 2020 to May 22, 2020https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-may-16-2020-to-may-22-2020/
https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-may-16-2020-to-may-22-2020/#respondSun, 24 May 2020 16:00:35 +0000https://www.broadcastlawblog.com/?p=7301Continue Reading…]]>Here are some of the FCC regulatory and legal actions of the last week of significance to broadcasters, with links to where you can go to find more information as to how these actions may affect your operations.

The FCC released the agenda for its June 9 Open Meeting announcing that it will consider an item of interest to TV broadcasters planning to transition to ATSC 3.0, the next generation television transmission standard. The item deals with what the FCC is calling “Broadcast Internet services,” new IP based services compatible with other Internet devices that will allow TV broadcasters to monetize their ATSC 3.0 spectrum in new ways. If adopted at the June meeting, the item, which we summarized in this article on the Broadcast Law Blog, would do two things:

It would allow a broadcaster to enter into spectrum lease agreements with other companies who offer Broadcast Internet services on the spectrum of several television stations in the same market without triggering the Commission’s attribution or multiple ownership rules.

The FCC last week announced that comments are due by June 22 in the review of its video description rules. Video description refers to an audio channel provided to accompany TV programming giving a narration of what is happening on the screen to aid blind or visually impaired persons. Currently, ABC, CBS, Fox, and NBC stations in the top 60 markets must supply video described programming, but under the FCC’s proposed new rules, those requirements would extend to markets 61 through 100 by January 1, 2021, with ten markets being added in the following four years. For more on the proposed rule changes, see our post at the Broadcast Law Blog. (Public Notice)

After announcing the settlement terms earlier this month, the FCC released the details of its consent decree with Sinclair Broadcast Group. The consent decree dealt with (i) disclosure issues around Sinclair’s failed takeover of Tribune Media Company; (ii) the accuracy and completeness of certain Sinclair applications; (iii) complaints of Sinclair’s noncompliance with the good-faith rules for retransmission consent negotiations; and (iv) on-air sponsor identification lapses. Though the Commission ultimately found that Sinclair structured the Tribune deal and made disclosures about its plans according to a good faith interpretation of the Commission’s rules, Sinclair nevertheless agreed to a $48 million penalty and four-year compliance plan to resolve all issues about these matters. (Order) See Broadcast Law Blog articles on the sponsorship identification issue when it was first raised in a 2017 Notice of Apparent Liability (here) and a prior Sinclair issue with retransmission consent negotiations (here).

FCC staff last week clarified, albeit informally as part of a webcast (as part of the NAB Show Express, available on demand here), that stations in states where the primary election date has been pushed back due to public health concerns may be subject to longer lowest unit charge (LUC) periods. In states where the 45-day window opened and then the primary election date was pushed back, a new window begins 45 days before the new date of the primary election. This could potentially result in a nearly 90-day LUC window tied to one election. See our article here from the Broadcast Law Blog where we explained how the postponed primaries would extend LUC windows.

As part of that same webcast, FCC staff reminded stations running special COVID-related public service announcements that featuring a candidate standing for election this year can trigger equal opportunities and public file obligations. If the candidate appearance is on a paid spot, the equal opportunities rights of opposing candidates would be to buy an equal number of paid spots. If the PSAs were run for free, then the candidate’s opponents are entitled, upon request, to the equivalent amount of free airtime. Look for more on this issue in the Broadcast Law Blog this week.

The FCC acted last week in two TV market modification proceedings that are good illustrations of the necessary elements of a petition for a change in the television market to which a county or other geographical subdivision is assigned for determining which stations are local for cable of satellite television carriage purposes. In the first, it rejected a petition submitted by Montezuma County, Colorado to modify the county’s DMA, so the county’s DISH Network customers could receive Denver’s KUSA. The Commission found that the county did not submit enough evidence to prove the need for market modification. In the second, the Commission upheld its Media Bureau’s decision to modify the markets of three Georgia counties, so that DISH and DIRECTV customers in those counties could receive four Atlanta TV stations. The Commission denied the appeal of the Greenville-Spartanburg-Asheville-Anderson DMA TV stations carefully analyzing the factors necessary to support the modification of the market and finding no reason to change the Bureau’s ruling. (Montezuma Market Modification) (Atlanta Market Modification)

The FCC declined to review its decision to cancel the license of KCPM(TV), Fargo, ND. The Media Bureau found that the station failed to transmit a signal for twelve consecutive months, which resulted in an automatic expiration of the license. This is a good reminder for station operators, and especially important for stations that may have gone silent during the current pandemic, to notify the FCC when a station goes silent and to re-commence operations within a year to avoid automatic cancellation of the station’s license. (FCC Letter) See this article from the Broadcast Law Blog about the FCC requirements for notice when a station goes silent, the article here about actions that the FCC can take against stations that fail to operate regularly during a license renewal term, and the article here about the strict interpretation that the FCC gives to Section 312(g) of the Communications Act which provides for the automatic cancellation of a license if a station has been silent for a year unless the FCC finds that preserving the license is necessary for reasons of equity and fairness, a finding rarely made.

]]>https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-may-16-2020-to-may-22-2020/feed/0This Week at the FCC: May 2, 2020 to May 8, 2020https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-may-2-2020-to-may-8-2020/
https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-may-2-2020-to-may-8-2020/#respondSun, 10 May 2020 03:49:57 +0000https://www.broadcastlawblog.com/?p=7280Continue Reading…]]>Each week, we summarize some of the regulatory and legal actions of the last week significant to broadcasters – both those from the FCC and those taken elsewhere –with links to where you can go to find more information as to how these actions may affect your operations. Here is this week’s list of significant actions:

The FCC’s Media Bureau last week made it easier for broadcast stations to rehire employees laid off due to COVID-19-related circumstances by granting relief from the broad outreach EEO requirement otherwise required when filling job vacancies. Licensees may re-hire full-time employees who were laid off without first conducting broadcast recruitment outreach if the employees are re-hired within nine months of the date they were laid off. As the economy hopefully turns around, this partial waiver should help stations ramp up their operations to full strength quicker than they would have been able to absent the waiver. (Order)(Broadcast Law Blog article)

Sinclair Broadcast Group (“SBG”) agreed to pay a $48 million penalty—the largest penalty ever paid to the FCC by a broadcaster—and adopt a compliance plan to settle investigations into (1) SBG’s lack of disclosure during its failed merger with Tribune Media; (2) its obligation to negotiate retransmission consent agreements in good faith; and (3) sponsorship identification failures on content produced and supplied by SBG to SBG and non-SBG stations. (News Release)

The FCC released the final agenda for its May 13 Open Meeting, with two items of interest to broadcasters. It is expected that both these items will be adopted before the virtual meeting scheduled for next Wednesday. (Agenda)

The first would modernize and simplify the public notices broadcasters must provide upon the filing of certain applications. This order, if adopted as drafted, would update many of the public notice requirements, end requirements for newspaper public notice, and abolish required license renewal pre-filing announcements (draft of the Report and Order).

The second action deals with regulatory fees. The draft order, despite opposition from VHF station licensees, declines to provide any blanket regulatory fee reductions to these stations as the FCC moves fully to television regulatory fees based on the population served by the TV station rather than the size of the market in which the station operates. The same document sets out for comment the proposed annual regulatory fees to be paid in September 2020 by all FCC regulated entities, including radio and TV stations (draft of the Report and Order and Notice of Proposed Rulemaking).

The Supreme Court granted Prometheus Radio Project more time, until July 21, to file a response to the petitions by the FCC and NAB asking for review of the Third Circuit decision that rolled back the Commission’s 2017 media ownership reforms, including the abolition of the newspaper/broadcast cross-ownership rule. If the request for review is granted, the Supreme Court will take up the case, at the earliest, during its 2021 term. (Time Extension Request)(see this Broadcast Law Blog article for more on the appeal that Prometheus seeks to oppose).

The comment period closed this week in the FCC’s FM “zonecasting” proceeding. The comments were submitted on a petition for rulemaking filed by GeoBroadcast Solutions, asking the FCC to change its rules to permit FM boosters to allow commercials, news reports or other short content to be dropped into their programming that would be different than the programming on the main station. Under the current rules, FM boosters must retransmit 100% of the programming from their originating station. (FM broadcast booster proceeding filings) (see this Broadcast Law Blog article for more information about the zonecasting proposal, and look for another article early this week summarizing the positions taken in the comments).

A Wisconsin television station filed a motion to dismiss the lawsuit brought by the President’s reelection committee claiming that an attack ad from the Priorities USA PAC which was broadcast on the station was defamatory. The motion argued that the campaign could not sustain a claim of defamation over an advertisement the station claimed was political speech protected by law including the First Amendment. (Motion to Dismiss – and watch for a summary in the Broadcast Law Blog this week).

]]>https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-may-2-2020-to-may-8-2020/feed/0This Week at the FCC: April 25, 2020 to May 1, 2020https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-april-25-2020-to-may-1-2020/
https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-april-25-2020-to-may-1-2020/#respondSun, 03 May 2020 16:29:21 +0000https://www.broadcastlawblog.com/?p=7266Continue Reading…]]>Last week, we started this feature of Here are some of the Washington actions of importance to broadcasters – at the FCC and elsewhere – which occurred in the last week, with links to where you can go to find more information as to how this may affect your operations.

The comment period ended in the FCC’s State of the Communications Marketplace Report proceeding. The FCC sought comment on the report to inform its assessment of the communications marketplace that it must deliver to Congress. In addition to the video and audio marketplaces, the report looked at the wireless, broadband, wired telephone, and satellite marketplaces. Reply comments are due by May 28. (Report)

The FCC Enforcement Bureau issued a Notice of Violation to a Maryland AM station for violating the operating hours authorized by its license. In this case, the station was authorized for daytime operation only (average monthly local sunrise time to average monthly local sunset time) and was observed operating long past 5:15 p.m., which was the average sunset time for the station’s service area in January 2019. Notices of Violation are issued directly by Enforcement Bureau field agents and require a written response. This serves as a good reminder to stations to abide by operating hours authorized by their license. (Notice of Violation)

In response to a January letter from FCC Commissioner Michael O’Rielly regarding payola practices, Sony Music Entertainment, Warner Music Group, and Universal Music Group submitted written responses that the Commissioner posted to his Twitter feed (Universal’s response will be posted when certain confidential information can be redacted). The record companies said there is nothing to support the allegations of payola and that any pay-to-play arrangements between the companies and radio stations are given the necessary on-air sponsorship identification. We wrote more about this at the Broadcast Law Blog. (@mikeofcc) (Broadcast Law Blog)

We published to the Broadcast Law Blog our recurring monthly feature that highlights important regulatory dates for broadcasting during the upcoming month. May is a month where there are no regularly scheduled regulatory filings (e.g., no renewals, EEO reports, fee filings, or scheduled public file disclosures). Nevertheless, as always, there are a number of important regulatory dates—and changes in some dates—for May of which broadcasters should be aware. (Broadcast Law Blog)

The FCC voted to reorganize the Media Bureau by eliminating the Engineering Division and moving the division’s staff and work to the Industry Analysis Division. The Commission believes this reorganization is a more effective use of available resources and should enhance the Bureau’s understanding and analysis of the media industry. (Order)

In advance of the long-expected (and delayed by COVID-19) move of its Washington, DC headquarters, the FCC adopted a new official seal. Expect to see this new seal adorning FCC materials, websites, and, when it opens, the new headquarters. (Public Notice).

The FCC Media Bureau settled by consent decree an investigation into the retransmission consent negotiating practices of television stations of a television operator who admitted to violating the good-faith negotiation rules, agreed to pay a $100,000 civil penalty, and adopted a compliance plan to be followed for three years. (Order and Consent Decree). This consent decree follows up on an FCC Media Bureau decision from last year which, though heavily redacted, provides more information on the good faith negotiation standards applicable to retransmission consent agreements.

]]>https://www.broadcastlawblog.com/2020/05/articles/this-week-at-the-fcc-april-25-2020-to-may-1-2020/feed/0Record Companies Respond to FCC Commissioner on Payola – What Should Broadcasters Learn from the Responses?https://www.broadcastlawblog.com/2020/04/articles/record-companies-respond-to-fcc-commissioner-on-payola-what-should-broadcasters-learn-from-the-responses/
https://www.broadcastlawblog.com/2020/04/articles/record-companies-respond-to-fcc-commissioner-on-payola-what-should-broadcasters-learn-from-the-responses/#respondWed, 29 Apr 2020 16:19:15 +0000https://www.broadcastlawblog.com/?p=7264Continue Reading…]]>The responses by the major record labels to Commissioner O’Rielly’s inquiry into allegations of payola practices (see our article here) were published last week while we were all distracted with pandemic issues. While the responses (available here on the Commissioner’s twitter feed) were perhaps not surprising – saying that the record labels do not engage in any on-air pay-for-play practices where the payment is not disclosed – they nevertheless highlight some practices that should be observed at every radio station. As I have said in many seminars to broadcasters around the country when talking about FCC sponsorship identification requirements, if you get free stuff in exchange for promoting any product or service on the air, disclose that you got that free stuff. As made clear in these responses, when the record companies give free concert tickets or similar merchandise to a radio station for an on-air giveaway to promote a concert or the release of new music by one of their artists, they agree with the station to reveal on the air that the record company provided the ticket or merchandise that is being given away.

The responses also indicate that these record companies do not provide musical artists to play at station events with any agreement – explicit or implicit – that the station will play those artists more frequently because of their appearance. While that might happen naturally, it also might not (if, for instance, the band is one of many acts participating at some station-sponsored festival). The record companies state that their contracts with stations for such events make clear that there is no agreement that any artist appearance is tied to additional airplay for that artist.

The responses also reference settlements with the New York State Attorney General’s office of payola allegations that occurred over a decade ago. A number of radio companies and record labels entered into settlements with the Attorney General’s office and the radio companies also entered into consent decrees with the FCC to resolve issues raised in these investigations. One of those settlement agreements with the FCC is available here, and sets out very specific compliance conditions including:

Prohibiting stations and employees from exchanging airtime for cash or items of value except under certain circumstances;

Placing limits on gifts, concert tickets, and other valuable items from record labels to company stations or employees;

Appointing compliance officers who will be responsible for monitoring and reporting company performance under the consent decrees; and

Reviewing the specifics of these agreements is an important way for stations to ensure that they are not unintentionally running afoul of the payola rules. These conditions recognize that there is some interaction to be expected between record labels trying to expose their music and radio companies deciding what to play. But that needs to be done in a way that is limited to avoid the appearance that money or other items of valuable consideration decide what is played on a station – unless the audience is specifically informed that the programming is sponsored. With these issues back in the news, be sure to observe these limitations.

]]>https://www.broadcastlawblog.com/2020/04/articles/record-companies-respond-to-fcc-commissioner-on-payola-what-should-broadcasters-learn-from-the-responses/feed/0A Webinar on FCC Issues for Broadcasters During the Current Crisis – And One More FCC Action on Sponsorship Identification on Paid PSAshttps://www.broadcastlawblog.com/2020/04/articles/a-webinar-on-fcc-issues-for-broadcasters-during-the-current-crisis-and-one-more-fcc-action-on-sponsorship-identification-on-paid-psas/
https://www.broadcastlawblog.com/2020/04/articles/a-webinar-on-fcc-issues-for-broadcasters-during-the-current-crisis-and-one-more-fcc-action-on-sponsorship-identification-on-paid-psas/#respondMon, 06 Apr 2020 14:24:10 +0000https://www.broadcastlawblog.com/?p=7234Continue Reading…]]>In the last three weeks, we have written about actions that the FCC has taken to help broadcasters through the current crisis caused by the COVID-19 virus. The FCC appears to realize that the business of broadcasting in the current crisis is vastly different than it was just a month ago. The FCC has provided relief on TV newsgathering and news sharing arrangements, issued a determination that no charge spots unrelated to an existing advertising schedule do not affect lowest unit rates, granted liberal extensions to stations in Phase 9 of the TV repacking, deferred the filing of Quarterly Issues Programs Lists and the Annual Children’s Television Reports to July 10, and recognized that college-owned stations that are silent when students are no longer on campus do not need an STA to remain silent. In a webinar I conducted for a number of state broadcast associations last Thursday, I summarized these developments and talked about other FCC rules and policies that broadcasters need to continue to observe during the current crisis. That webinar is available on the website of the Indiana Broadcasters Association which hosted the session and can be viewed here.

On Friday, the FCC added to the actions that it has taken to assist broadcasters – issuing a Public Notice adopting a policy that, through June 30, commercial advertisers can donate ad time to government agencies or charities to run PSAs dealing with issues relating to COVID-19 without the station having to identify the companies donating the spots as sponsors of the PSA. Even though the commercial sponsors paid for the time, they don’t need to associate themselves with the virus spots. This was at the request of the Ad Council, which suggested that some advertisers had ad time that they no longer needed but were reluctant to donate it to COVID PSAs as they feared that, if they were identified as sponsors, their businesses would somehow be associated with the virus. While it may be the unusual situation where an advertiser cancels its ad schedule and is willing to donate the advertising time for charitable uses without acknowledgement, in some cases it may give broadcasters one more way to try to convince advertisers not to totally cancel their schedules. And it shows that the FCC is continuing to do its best to assist advertisers in this trying time. Watch for more developments in the coming weeks.

]]>https://www.broadcastlawblog.com/2020/04/articles/a-webinar-on-fcc-issues-for-broadcasters-during-the-current-crisis-and-one-more-fcc-action-on-sponsorship-identification-on-paid-psas/feed/0FCC Commissioner Asks Record Labels for Information About Payola Practices – What are the FCC Rules? How Do These Practices Compare to Online Music Providers?https://www.broadcastlawblog.com/2020/01/articles/fcc-commissioner-asks-record-labels-for-information-about-payola-practices-what-are-the-fcc-rules-how-do-these-practices-compare-to-online-music-providers/
https://www.broadcastlawblog.com/2020/01/articles/fcc-commissioner-asks-record-labels-for-information-about-payola-practices-what-are-the-fcc-rules-how-do-these-practices-compare-to-online-music-providers/#respondMon, 27 Jan 2020 16:52:34 +0000https://www.broadcastlawblog.com/?p=7160Continue Reading…]]>Last week, FCC Commissioner Michael O’Rielly was in the news for sending a letter to the major record labels asking for information about their practices in paying broadcast stations for airing the label’s music. The letter follows correspondence last year between the Commissioner and the RIAA (the Recording Industry’s trade group) asking for similar information, which the RIAA claimed that it did not have. This process began after a Rolling Stone magazine article suggested that “payola” was still a common practice in the broadcast industry. These actions, and the press reports that followed, raise a couple of interesting questions including what the FCC rules are on payola, and how broadcast practices compare to those of online companies.

The Communications Act prohibits the practice of “payola” by requiring, in Section 317, that when any content is aired on a station in exchange for anything of value, the station must disclose that “consideration” has been paid by the person or entity that pays for the consideration. Thus, “payola” arises when a broadcast station employee or contractor receives or is promised anything of value in return for putting any content on the air, and that payment is not disclosed to the public. Payola usually occurs when someone makes a gift or payment to a person involved in station programming (i.e., station employees, program producers, program suppliers) in exchange for favorable on-air exposure of a product or service. While the term “payola” is most often associated with the receipt by a station announcer or music director of money, trips or other value for playing songs on the station, the same prohibition applies whenever any station programming personnel receive anything of value in exchange for airing any content where a sponsorship identification is not broadcast. For examples of fines for airing programming for which consideration was received without acknowledging the receipt of valuable consideration, outside the context of music, see our articles here, here and here.

Section 317 requires that stations take actions to ensure that their employees and program suppliers disclose consideration received for airing program content. Most radio stations do this through routine distribution to their employees of payola policies, and in many cases getting affidavits from employees acknowledging that they have received information about the FCC requirements and understand the obligations.

Note that payola only exists where there is no disclosure of the receipt of something of value for the on-air content. Payola is not an issue when full disclosure is made. It is the lack of sponsorship disclosure that makes the transaction illegal. Thus, a station is not in violation of the rules, even if it is paid to air songs or program segments, if on-air disclosure of the payment or other consideration is made. The disclosure is supposed to be made at the time that the sponsored material is aired.

While payola (playing music for consideration without disclosing the consideration) may be illegal for broadcasters, the Commissioner notes in his letter that some have requested that this prohibition be reexamined in light of the current state of the marketplace, where broadcasters are competing against other distributors of programming who may not be subject to such rules. While there are general obligations to disclose consideration for material transmitted for consideration via Internet platforms, those obligations are far less stringent than those of broadcasters (obligations for online platforms include general sponsorship disclosure obligations imposed by the FTC, see our article here, and state laws may apply to online platforms, see our article here). Those disclosure obligations are often met in disclosures that are less obvious than those that are required of broadcasters. If one looks, for instance, at the terms of service for online music platforms, there are statements that acknowledge that some may be receiving consideration for their music selections, but these are often very general statements buried in the site’s terms of use. There is, for instance, this disclosure on one music service’s site:

In any part of the [NAME OF SERVICE] Service, the Content you access, including its selection and placement, may be influenced by commercial considerations, including [SERVICE’S] agreements with third parties.

While the standards may be different from those that apply to their online competition, right now, for broadcasters, they are still strict. Broadcasters should ensure that they are educating their staffs about the obligations to identify when on-air content has been sponsored so that the proper disclosures can be made. As violations of these requirements can result not only in FCC fines but also in criminal actions (see 47 U.S.C. Section 507), knowing the rules is very important. This article provides just a snapshot of those rules – study them in detail and talk with your counsel about the obligations they impose to avoid the potentially serious consequences that can result if they are not followed.

]]>https://www.broadcastlawblog.com/2020/01/articles/fcc-commissioner-asks-record-labels-for-information-about-payola-practices-what-are-the-fcc-rules-how-do-these-practices-compare-to-online-music-providers/feed/0$233,000 Proposed Fine for Sponsorship Identification Rule Violations – Warning, if the FCC Fines You Once, Don’t Do the Same Thing Againhttps://www.broadcastlawblog.com/2019/08/articles/233000-proposed-fine-for-sponsorship-identification-rule-violations-warning-if-the-fcc-fines-you-once-dont-do-the-same-thing-again/
https://www.broadcastlawblog.com/2019/08/articles/233000-proposed-fine-for-sponsorship-identification-rule-violations-warning-if-the-fcc-fines-you-once-dont-do-the-same-thing-again/#respondFri, 09 Aug 2019 13:38:16 +0000https://www.broadcastlawblog.com/?p=6968Continue Reading…]]>The FCC this week issued a Notice of Apparent Liability proposing a $233,000 fine to Cumulus Media for violations of the sponsorship identification rules. The fine illustrates not only how seriously the FCC takes its sponsorship identification rules (particularly in the context of political and issue advertising) but also the how aggressively the FCC can act for even the slightest violation of a consent decree involving a prior violation of its rules. If the FCC catches you once in a rule violation, don’t get caught again for the same violation – and if you agree to the terms of a consent decree in connection with that first violation, by all means abide by the letter of that decree or the FCC will not hesitate to exercise its full enforcement power.

This case involves alleged violations by Cumulus Media. Three years ago, Cumulus entered into a consent decree with the FCC agreeing to pay a $540,000 penalty after admitting that it did not include a full sponsorship identification disclosure on issue ads supporting government approval of an electrical utility project in New Hampshire (see our article here on that consent decree). As part of the consent decree, the company agreed to a 3-year compliance program to educate its personnel about the FCC’s sponsorship identification rules, to appoint a compliance officer to oversee compliance with the rules and answer questions, and to report to the FCC within 15 days any violations of these FCC rules. In the Notice released this week, the FCC alleged that Cumulus reported that it had in two instances aired ads without the proper identification – each set of ads running 13 times before the lack of a proper identification was caught and corrected. In one instance, the violation was reported to the FCC within two weeks, but in the other case, it was not reported to the FCC for approximately 8 months. Based on this instance of late reporting, and the 26 sponsorship identification violations, the FCC proposed the $233,000 fine. How did they come up with that number?

The FCC’s base fine for each violation of its sponsorship identification rules is $4000 per violation. Because of the 2016 violation, the FCC determined that each of the new violations should be fined at twice that level, as the licensee should have learned from its prior mistakes. The FCC considers each airing of the ad to be a separate violation (see this article about a prior case where this policy was applied). Thus, the 26 ads without the proper identification times $8000 led to a fine of $208,000. The FCC then decided, because of the one late reporting of the violations, the fine should be increased by $25,000 for not adhering to the terms of the consent decree. Adding those two figures, the FCC arrived at the proposed fine of $233,000.

While this week’s release does not detail the specifics of the alleged violations, the first appears to have been a commercial message aired on multiple stations a total of 13 times. The second was a spot aired in connection with the Georgia governor’s election last year. Neither spot appears to have run for more than a few days, and in both cases, Cumulus stated that it had not only caught and corrected the violations, but it had also conducted training on the rules after being alerted to the problems. These violations would seem like the kinds of issues that could arise at any station when a spot with an inadequate sponsorship tag slips on to the air unnoticed. It would seem laudable that Cumulus apparently caught and corrected the problems quickly, yet the FCC came down hard on the company, with one Commissioner issuing a dissenting statement suggesting that the penalty was not enough. The message to broadcasters? The FCC is still watching very closely so don’t mess up – and if you do and are subject to FCC penalties, by all means do not do it again.

]]>https://www.broadcastlawblog.com/2019/08/articles/233000-proposed-fine-for-sponsorship-identification-rule-violations-warning-if-the-fcc-fines-you-once-dont-do-the-same-thing-again/feed/0FEC Seeks Comment on Proposal for Change in TV Political Disclosureshttps://www.broadcastlawblog.com/2019/02/articles/fec-seeks-comment-on-proposal-for-change-in-tv-political-disclosures/
https://www.broadcastlawblog.com/2019/02/articles/fec-seeks-comment-on-proposal-for-change-in-tv-political-disclosures/#respondTue, 12 Feb 2019 14:05:25 +0000https://www.broadcastlawblog.com/?p=6684Continue Reading…]]>We usually think of the FCC as the agency that sets the details of the broadcast disclosure obligations for political candidate’s TV ads. But the Federal Election Commission has its own rules for political advertising that are binding on the candidates, rather than on the stations. But because these ads run on broadcast stations, stations need to pay attention to them to avoid getting caught up in arguments about whether candidate ads are legal, and because the FEC rules often get adopted by the FCC. For these reasons, broadcasters need to pay attention to an entry in today’s Federal Register, where the FEC gives notice of its receipt of a Petition for Rulemaking proposing changes to the textual disclosures made in TV political ads.

Right now, the written disclosures of the sponsor of political ads need to run at 4% of vertical picture height for not less than 4 seconds – the same requirement reflected in both the FEC and FCC rules. The proposal on which the FEC seeks comment suggests that the screen height requirements in the current rules are outdated in the digital television world. According to the Petition, current industry guidelines for a normal disclaimer size is 22 pixels (approximately 2% of the vertical picture height) using HD resolution. Thus, the Petition suggests that 2% be adopted as the standard for political disclosures when shown on high definition digital television transmissions, with the 4% obligation being retained for standard definition broadcasts. After receiving comments, the FEC will decide whether to commence a formal rulemaking proceeding. Comments on this proposal are due on or before Monday, April 15, 2019.

]]>https://www.broadcastlawblog.com/2019/02/articles/fec-seeks-comment-on-proposal-for-change-in-tv-political-disclosures/feed/0More Podcast Legal Issues – Remembering Sponsorship Identificationhttps://www.broadcastlawblog.com/2018/09/articles/more-podcast-legal-issues-remembering-sponsorship-identification/
https://www.broadcastlawblog.com/2018/09/articles/more-podcast-legal-issues-remembering-sponsorship-identification/#respondMon, 17 Sep 2018 15:35:23 +0000https://www.broadcastlawblog.com/?p=6547Continue Reading…]]>In recent weeks, we’ve written about a number of legal issues that need to be considered in connection with podcasting – getting releases from guests, making sure that ownership of the podcast is clear, and considering music royalties. Another issue that I discussed in my presentation on legal issues for broadcasters entering the podcast industry at Podcast Movement in late July was one of sponsorship identification. Broadcasters are familiar with the FCC requirements for the identification of those who provide something of value to a station in exchange for any on-air content. While the FCC does not regulate podcasting, those issues cannot be ignored even in this online medium.

As we have written before (see our articles here and here), the Federal Trade Commission has rules similar to the FCC about identifying when the podcast producer has been paid to say something in his or her podcast. The FTC requires that disclosure of sponsored material be “clear and conspicuous.” So, even on short-message social media applications like Twitter, influencers paid to tweet about a product or service are required to identify their sponsored message in some way – like a “#ad” in the tweet to identify that it was sponsored. In the podcast world, where podcast hosts often do “live reads” of sponsor’s messages, the host needs to be careful to meet the FTC’s clear and conspicuous requirements. So if the commercial message is integrated so closely into the podcast content that the listener cannot tell that it is a commercial message, some sort of disclosure is required. Similarly, if the host of the podcast is using his or her social media to promote the sponsored message in the podcast, sponsorship identification would be required there as well. I’ll be talking about this and other legal issues for broadcasters in connection with their podcasts in a webinar for the Michigan Association of Broadcasters (and many other state broadcast associations) on Thursday. If you are interested, check with your state broadcast association to see if they are participating in this program.

]]>https://www.broadcastlawblog.com/2018/09/articles/more-podcast-legal-issues-remembering-sponsorship-identification/feed/0Google Announces Programmatic Buys of Audio Ads – Looking at Legal Issues with Programmatic Saleshttps://www.broadcastlawblog.com/2018/06/articles/google-announces-programmatic-buys-of-audio-ads-looking-at-legal-issues-with-programmatic-sales/
https://www.broadcastlawblog.com/2018/06/articles/google-announces-programmatic-buys-of-audio-ads-looking-at-legal-issues-with-programmatic-sales/#respondTue, 05 Jun 2018 15:25:58 +0000https://www.broadcastlawblog.com/?p=6429Continue Reading…]]>Last week, it was announced that Google through its DoubleClick platform, would be offering programmatic buying opportunities for advertisers looking to place audio ads into online streams. While that system is initially being rolled out among the big digital audio services, if it or other similar platforms are expanded more broadly, it could bring more advertising into internet radio, podcasting and other digital audio program channels. But, being the spoilsports that we tend to be as lawyers, we wanted to pass on some issues to consider in accepting programmatic buys – whether in online streams or in over-the-air broadcasts. The immediacy of the audience’s perception of an audio insertion into a program stream can bring unintended results – some of which may have legal consequences.

We have already written about the issues for some of the programmatic buying platforms that are inserting ads into broadcast radio and television programming. As we wrote here and here, these ads can potentially impact a broadcaster’s legal compliance – particularly in the area of political broadcasting, where these ads could affect a station’s lowest unit rate, as well as reasonable access, equal opportunities and even political file disclosure obligations. While none of these FCC issues apply directly to online ads, as we wrote here, there are potential rules on political advertising that may soon be applied to online ads, either through actions by the Federal government or by the enactment of rules to implement a recently passed New York State law that compels disclosures for online political ads similar to those required by the FCC for broadcast ads. There are other considerations as well.

When we wrote about the impact of programmatic buying on broadcast ads, we mentioned the concern about complying with the FCC’s sponsorship identification rules. While the FCC’s rules apply only to over-the-air broadcasting, the Federal Trade Commission (FTC) has similar disclosure obligations for online ads. See our articles here and here for more details. While one might expect that these sponsorship identification issues would be the responsibility of the advertiser, the insertion of the ads into online streams may make the ad seem more like part of the programming offered by an Internet radio company or digital audio provider. Even were the FTC to look only to the ad provider for liability purposes (which is not a certainty), there may be inquiries first to the platform on which the ad is hosted, which may cost, if nothing else, time and money to respond.

Similar issues may arise with other types of advertising. While the typical direct advertiser coming through an advertising agency is likely to be familiar with the ins and outs of other advertising rules (e.g., disclosure of credit terms on leases; making health claims about certain types of unproven drugs, vitamin products or even vaping products; comparative advertising disclosures; ads containing celebrity endorsement and testimonials, etc.), an ad placed directly though some programmatic platform by a local business may not be as sophisticated in complying with all these advertising limitations.

Even outside the legal issues that may arise, there may be business concerns when advertisers have direct access to automatically place their ads into your online advertising. If, for instance, you are running a Christian music webcasting operation, you can imagine various categories of advertising that you would not want to find inserted into your stream – and certainly there could be an audience reaction. That has been an issue from time to time with various website operators who find an ad service has placed an unwanted banner ad on its site conveying a message antithetical to the message that the site owner is looking to convey. A negative reaction is even more likely should an audio ad conveying an unwanted message pop up in your stream.

Does that mean that programmatic ads should not be taken? Likely not, as they are an important method for attracting more new advertising to your online audio products. But, as with any other new product, make sure proper protections are in place to avoid having material placed into your stream that has not been vetted in some way to insure compliance with the law and with any message that you are trying to convey through your online audio programming.